SEPARATIST rebels have killed seven Ukrainian soldiers in a bloody ambush in the restive east on Tuesday, rattling efforts by Europe to resolve the escalating crisis on its doorstep.

The violence flared as German Foreign Minister Frank-Walter Steinmeier was in Ukraine to push Kiev and pro-Moscow rebels to come together at the negotiating table after the East-West security body OSCE drew up a road map aimed at easing tensions.

But the battle lines remained drawn, with fears that Ukraine could be threatened with collapse following weekend independence referendums in the eastern industrial provinces of Donetsk and Lugansk that have been rejected by Kiev and the West.

Russia, despite expressing support for the “extremely important” road map, said Kiev must halt its military operation in the east if rebels are to comply with the peace initiative.

And it accused Ukraine’s pro-West authorities of refusing “real dialogue” with the separatists.

The Organisation for Security and Cooperation in Europe, which began life as a forum for East-West dialogue in the Cold War, said the initiative focuses on “restraint from violence, disarmament, national dialogue, and elections”.

Kiev is hosting a roundtable meeting involving the government, parliament and regional leaders — but notably not any separatist representatives.

On the ground, the Ukrainian military suffered one of its bloodiest single days since the separatist insurrection in the east erupted.

Kiev said seven soldiers were killed in an ambush by rebels armed with heavy weapons between the insurgent strongholds of Slavyansk and nearby Kramatorsk, bringing to 16 the number killed since mid-April.

Also on Tuesday, rebels in Lugansk claimed their self-styled governor Valery Bolotov survived an “assassination attempt” after assailants opened fire on his car with automatic rifles.

Violence has raged for weeks in eastern Ukraine as government troops carry out what it describes as “anti-terrorist” operations against well-armed rebels who seized cities and towns in the chaos that followed the ouster of Ukraine’s pro-Russian leader Viktor Yanukovych in February.

Interim President Oleksandr Turchynov insisted that the offensive would continue despite the Kremlin’s demands.

There had been fears that Mr Putin would move quickly to annex the territories of Lugansk and Donetsk as he did with Crimea in March, despite Western outrage.

And while urging rebels to sign up to the OSCE road map, Moscow has also kept up the pressure on Kiev, insisting that negotiations on regional rights must take place before the country’s planned presidential vote on May 25.

The crisis has plunged the West’s relations with Russia to their lowest point since the Cold War and raised European concerns about the vital supply of Russian gas, much of which flows through Ukraine.

Vote . People attend celebrations of what pro-Russian activists claimed victory in an independence referendum in the eastern Ukrainian city of Lugansk.Source:AFP

Mr Yatsenyuk, in Brussels to seek EU support for his beleaguered government, threatened to take Russia to the international arbitration court if it rejected proposals to settle their dispute over gas contracts and prices.

Russia has threatened to cut supplies from June 3 if Ukraine does not settle a $1.66 billion bill.

Mr Steinmeier, who travelled to both Kiev and Odessa, said the situation in Ukraine remained “very threatening” but called for “a national dialogue.” “I hope this will create the conditions to take a step to bring back occupied territory, disarm armed groups step-by-step and reinstall the authority of the state,” he said.

He also said the presidential election — called by Kiev’s new leaders after they took power in February — will “play a crucial role” in bringing the country out of crisis.

The roundtable discussions, to be moderated by veteran German diplomat Wolfgang Ischinger, “are of course only a start”, Mr Steinmeier conceded.

Poland also sounded alarm bells, warning that its neighbour risked becoming a failed or divided state unless the EU effectively supports the May 25 vote.

Fresh violence ... An armed pro-Russian man checks a car at the barricades on a road leading into Slovyansk, eastern Ukraine.Source:AP

In Moscow, the foreign ministry said it “expects” Ukraine rebels to comply with the OSCE road map, as long as Kiev does — and called on Ukraine’s leaders to agree to talks in the near future.

The Russian ministry also said Kiev had to immediately stop “reprisal raids” in the east — using a term that refers to a Nazi massacre in 1943 — and pull back troops from the encircled cities and towns.

The increasingly urgent diplomatic flurry comes after eastern rebels Monday appealed to join Russia following what they claimed were resounding victories in independence referendums.

Both European and US officials denounced the votes as illegal, with Brussels slapping a new round of sanctions on Russians and Crimeans involved in the crisis.

And Donetsk governor Serhiy Taruta said on Tuesday the referendums were nothing more than a “social survey”.

“As for the Donetsk People’s Republic, such a republic does not exist legally or politically,” he said. “There is only a dreamt-up name and nothing else.” Moscow however said it “respects” the votes and called for talks with rebels in the industrial regions, home to seven million of Ukraine’s 46 million people.

Rebel officials in Donetsk said 89 per cent of voters there backed breaking away from Ukraine in Sunday’s referendum, while separatists in Lugansk said 94 per cent had supported independence.